Market Report: Sainsbury's leaping after horse all-clear
Horse-free meat is on the menu at Sainsbury's and its shares were gobbled up as the rest of the stock market slumped. Sainsbury's confirmed no horse meat was found in its beef products following 250 tests in line with the Food Standards Agency rules. Sainsbury's had withdrawn some burger lines last month amid the food scandal but has now confirmed it has not found any traces of horse DNA.
In a day of very few gainers on the benchmark index, Sainsbury's shares were in third place on the table of risers – its shares put on 2.7p to 337.8p.
Its chief executive Justin King last week insisted he did not think the contamination was widespread and said it is not "the tip of an iceberg" for the food industry. The "horse meat adulteration scandal" as analysts at Shore Capital describe it, could be a force for change in the food supply chain for supermarkets. Shore's analysts think there is an "improving basis to believe that brighter skies may be ahead for the reputable end of the meat-processing industry".
Sainsbury's has been winning on a few fronts compared with larger rival Tesco recently. Market researcher Kantar Worldpanel found Sainsbury's was the only one of the big four to see its market share grow in December.
Tesco's shares dipped 0.75p to 373.65p, but beat the overall market.
The benchmark index was rattled by news from the United States on Wednesday night. The FTSE 100 index had reached a five-year high on Wednesday but after the US Federal Reserve's minutes suggested that quantitative easing could be drawn to a close sooner rather than later, investors were booking profits. The Footsie lost 103.83 points to 6291.54.
Matt Basi, a senior sales trader at CMC Markets UK, said: "Equity traders have thrown a global tantrum, taking chips off the table in a clear indication that they don't want to play without the Fed adding liquidity to the pot."
Top of the tree was BAE Systems. It revealed a fall in profits but launched a £1bn share buyback, and its shares surged by 13.7p to 345.9p.
Analysts at Bank of America Merrill Lynch and JPMorgan took a look at Glasgow engineer Weir Group, which will report results next week. Both concluded the shares are worth a buy as they think fracking activity could boost sales. Fracking, or hydraulic fracturing, is the controversial process of drilling and injecting fluid into the ground to fracture shale rocks to release gas.
The method might be controversial but analysts reckon the fracking industry is taking off. JPMorgan upgraded Weir to buy as "frack activity is poised to rise". It gave the shares a target of 2,500p. While Bank of America Merrill Lynch gave them a 2,300p share price target. But the shares were down, in line with the rest of the market, and lost 30p to 2,158p.
Investec's Ian Gordon was at it again with his dislike for Royal Bank of Scotland. RBS has been the worst-performing UK bank in the year to date and Mr Gordon warned: "Life really isn't getting much easier for RBS." Mr Gordon's sell stance is nothing new but he reckons the bank still has a lot of bad news to unload in its fourth-quarter update next week. He thinks it will reveal an attributable loss of £2.2bn "or £5.6bn for full-year 2012 earnings".
RBS shares were down 7.6p at 346.5p and Mr Gordon gave it a 290p target.
On the mid-tier index, Cambridge-based microchip maker CSR was top, up 47.3p to 432.7p, hitting a two-year high after revealing record sales.
Over on Aim, Fastnet Oil & Gas has acquired an option to farm in to the Petronas-owned Deep Kinsale prospect, offshore southern Ireland. One of Fastnet's main backers is Cove Energy founder and chief executive John Craven. Fastnet's shares trickled up 0.38p to 25.62p.
Life sciences company ValiRx appointed Samuel Ogunsalu as its new chief commercial officer and its shares added 0.01p to 0.58p.
Today is the deadline for private-equity group EME Capital to make an offer or walk away from jeweller to the stars Theo Fennell. The shares glistened up 0.25p to 11.25p in anticipation of news. The jeweller, a favourite of Sir Elton John and Victoria Beckham, revealed disappointing Christmas sales last month and had said its full-year results would be "materially below management expectations."
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